Buyers asking for £60k off just before exchange

[Loobydoobies]

Just as the header says. Suddenly wrote us a long letter ranting about interest rates etc, and asking for a huge discount.

We live in an area where property is scarce and holding its value ATM due to that. Told agent to tell them where to go. I am furious as we will lose our dream home.

Look at the rate rises 88/89.

Followed by a swathe of repossessions.

www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

That is so awful! What’s wrong with people…

Hope they’ve received some well deserved karma for what they’ve put you through!

This frightens the life out of me! Pretty much everyone I know with a mortgage would be ruined. Surely this can't happen again? *crossed fingers v tightly!

Very very unlikely, don't loose any sleep :)

It's a different market with different regulations than in the 80s/90s. The banks have been instructed to avoid repossessions at all costs.

No it won't happen again in the foreseeable future, don't worry.

The forecast is for the Bank of England base rate to peak at about 5.75% (it's currently 5.25%) and then to start to slowly decline from 2024, settling eventually at about 4%.

I'm older than most of you it appears(!), and I was working in a bank in the 80's. At one point, we were getting interest rate change messages from head office several times a day. Up and up and up, and it peaked at somewhere around 14%.

That was always my benchmark to myself - never take on a mortgage if I couldn't afford the repayments if the interest rate went up to 14%.

Wow.

Still here! Promise to be back with an update when I can!

Loopydoobies

Wishing you all the best in your house sale.

@Loobydoobies - I'm still keeping my fingers crossed for you

I always remember my parents paying 16% so always bore that in mind. If it had ever hit that, then we would have been living on baked beans and potatoes but we did budget for it.

That was the situation we lived through. Bought our house mid 80s at 7% which was a total stretch, then watched helplessly as rates rose to 15%. We managed to get through it but had credit card debts we couldn't shift for years. And I don't remember gazumping or last minute price-drop tricks being a thing back then.

Yup we also remember this time and we were young FTBs in our first flat. We put lots of stuff on credit cards also which wasn’t advisable but looking back, was understandable. There was also a high “poll tax” to pay at this time which lots of our friends just refused to pay as it was all too much.

@Melroses snap. I bought my first flat in the early nineties and asked the mortgage advisor to model the repayments rising to 15% as I’d watched my parents having to pay that in 1988. He was roughly the same ages as me and looked at me like I had two heads. “That’ll never happen” he said. I said “What are you talking about, it literally just did”. Turns out his parents didn’t own their own house so all of that worry had passed him by. So I guess your own experiences do affect your level of risk taking when it comes to debt, but if you have had no exposure to past rate rises, why would you even consider it as a factor? I then worked in an office with mainly older men and there was a chap who constantly remortgaged to reduce his overall lifetime interest. When fixed rates first came out the fee to remortgage was minimal and no survey was required (You could also self certify your income) Most of the other chaps used to take the piss out of him as they didn’t follow what he was doing. Bless him, he talked me through it and I never forgot his advice, he saved me a packet.

@Loobydoobies fingers crossed for you.

Why do you have such odd property selling/buying laws in England? Here, once the conditions of the sale are met and it becomes unconditional that's it, you can't chop and change pricing, not going through with the deal, etc.

There is no law to enforce this. Banks will protect their interests

This is correct, but it's also important to note that it's in the banks favour not to take the house but to extend your term or offer interest only - because overall that makes them more money ! First priority for them is to keep you paying as much as possible.

It's not in the banks interests to repossess unless they really have to because the owner has stopped making any effort to repay the debt or communicate with them. That's why the advice given is always to talk to your Bank if you are in financial difficulty, don't bury your head in the sand.

I think the Banks have learnt that it is far better (even just from a business point of view) to avoid repossessions where at all possible, by extending the term, allowing interest only or payment holidays etc.

Where is "here"?

Banks may possibly spin off a rental department x

I suppose different countries have different points at which "the conditions of sale are met"

In England that happens to be the point at which contracts are exchanged.

Exactly the same in England. On exchange the contract to buy/sell becomes binding.

You can exit, but normally only at a very high cost from this point onwards (actually the penalties depend on the details of the contract).

Bascially at any point until exchange the terms of the deal can be renegotiated by either side. The other side do not agree to the changed terms the deal can collapse. I think about 30% of house sales fail this way, so its a high probability that people should be aware of.

Correct, and the banks don`t control interest rates, global events and bond market reaction to these events control interest rates.

"I think the Banks have learnt that it is far better (even just from a business point of view) to avoid repossessions where at all possible, by extending the term, allowing interest only or payment holidays etc."

Yes, where at all possible, but if people cant or wont pay they will lose their house, not everyone wants a 60 year mortgage and the debt based system relies on a consequence for non-payment, the banks are not letting people keep the house unless they are getting good terms (for the bank)